Data published by HCOB showed that business activity in the private sector of the eurozone rose slightly in January, reaching the highest level since July. However, service sector cost growth accelerated during the month, contributing to the steepest overall rise in prices charged for goods and services since last May.
The Eurozone Composite PMI Output Index rose in January to 47.9 points from 47.6 points in December. The index remains below the 50-point mark, which indicates a reduction in activity in the private sector, for the eighth month in a row. Economists had expected the index to rise to 48.0 points. The services PMI declined to 48.4 points from 48.8 points in December, while the manufacturing PMI rose to 46.6 points from 44.4 points. Economists had expected the services PMI to rise to 49.0 points and the manufacturing PMI to reach 44.8 points.
HCOB said that the overall contraction of new orders was the smallest recorded since last June/ Meanwhile, overall new export orders dropped at the slowest rate for nine months thanks to reduced losses for both goods and services. Backlogs of orders fell for the eighteenth time in the past 19 months, but the rate of decline remained unchanged compared to December. Private sector employment increased modestly in January as a slight increase in net hiring in the services sector offset an eighth straight monthly decline in manufacturing employment. In addition to reducing employment, manufacturers reduced purchasing activity for the nineteenth month in a row in response to lower production needs in the coming months, which led to the twelfth consecutive monthly reduction in stocks of raw materials. Average prices charged for goods and services rose at the steepest rate since last May. Meanwhile, the rate of selling price inflation has now ticked higher for three consecutive months to therefore remain elevated by the historical standards of the survey. Looking ahead, business optimism about the coming 12 months improved for a fourth successive month in January, rising to the highest since last May.